Stuff repeats Herald mistake on foreign buyers

Yesterday NZ Herald:  It’s not 3% – ASB analysis suggests up to a fifth of properties sold to non-residents

Analysis from ASB has found that Statistics New Zealand’s estimate that non-citizens accounted for only 3 per cent of house purchases is well short.

Economists from the bank say the figure more likely sits between 11 and 21 per cent.

Examining transfers or purchases of New Zealand property, Mark Smith and Nick Tuffley analysed the information and reached different conclusions to those released by Statistics NZ.

“The estimates suggest that non-resident purchases made up around 3 per cent of nationwide house purchases over the March 2018 year. This was in a similar ballpark to previously published figures. However, anywhere from 11 per cent to 21 per cent of reported purchases over that period involved a non-NZ citizen, with the proportion considerably higher for some areas, particularly Auckland and Queenstown,” they wrote in their latest Economic Note.

This was criticised on Twitter:

Going deeper into the economic note, there is a strong sense that the reason non-residents and non-citizens are getting mixed up is because the authors of this report believe that citizens have more of a right to own property than non-citizens, even those who are resident here.

Hey , resident non-citizens who buy houses so they can live somewhere are not the same as the “overseas investors” that you’re worried about. Conflating them is not just misleading, but kinda dangerous eh?

ASB did the analysis, published an economic note/report, and then gave it to all the media agencies, who are basically just quoting what it says in the report. So pretty sure the fault lies with ASB’s economists.

ASB conflated them. The distinction matters because there are people who live in this country who are non-citizens, but they are definitely residents and shouldn’t be lumped into “foreign investor”

I know someone who was a permanent resident for over thirty years, part owning four houses, before becoming a citizen.

The Herald have since changed the headline to “sold to non-citizens”.

But today Stuff make the same mistake, if not worse: As many as one in five house buyers in NZ may be foreign

Restrictions on foreigners buying New Zealand property will depress prices, one economist says – and the effect may be greater than some have predicted.

The Overseas Investment Amendment Bill is working its way to becoming law.

But while official statistics and anecdotal evidence from the real estate industry indicate only 3 per cent of sales are to overseas buyers, ASB senior economist Mark Smith at ASB said that number might be deceptively low.

He said another 8 per cent of sales were attributable to resident visa-holders who were not citizens, such as people who had newly migrated.

And such as people who migrated years ago, and decades ago.

Another 10 per cent were corporate entities, for which ownership information is not available.

If there is no information then no assumptions can be made about nationality.

He said anything from 11 per cent to 21 per cent of purchases in the March 2018 involved a non-New Zealand citizen.

Actually that should be “anything from 3 per cent to 21 per cent of purchases in the March 2018 involved a non-New Zealand citizen”.

But it is unlikely to be anywhere near 21%. And permanent residents are likely to be a significant portion of 3-11%.

This is poor analysis from the ASB and very poor reporting from the Herald and Stuff.

 

Foreign buyer rules relaxed

Prior to getting into Government Labour talked up the effect of foreign buyers on the New Zealand housing market, and copped a lot of criticism for their ‘Chinese sounding names’ claims. They were also accused of exaggerating the impact of foreign buyers – and this has turned out to be true with foreign buyers being just 3% in recent statistics.

Once in power Labour restricted foreign buyers despite warnings of what that would do to discourage new housing developments. They have now partly backtracked.

RNZ:  Government relaxes rules on foreign buyer ban

The government’s overseas buyers’ ban on New Zealand homes has been softened, with some multi-storey apartment buildings now being exempted.

New Zealand officials and minister have also been negotiating with Singapore as the ban contravenes agreements between the two countries – that has now been resolved with Singapore securing an exemption, along with Australia.

Since the legislation has gone through select committees the government has acknowledged some fish hooks, that may have actually put the brakes on housing supply in Auckland.

Broadly, they apply to developers concerned about not being able to complete big projects if they can’t sell individual apartments to foreign buyers.

Another issue was overseas corporates getting caught up in the ban when they wanted to buy residential land – for example to build cell phone towers.

They were valid concerns, Trade Minister David Parker said.

“The advice we had from officials was that if we didn’t allow investment in apartment buildings then the whole complex was more likely not to proceed so there would be fewer purchase choices for New Zealanders,” Mr Parker said.

Parker has admitted they rushed to implementation of the changes and have had to reconsider when it became apparent it was having an adverse effect on trying to get more houses and apartments built.

Under the new regime, overseas investors would be able to invest in new housing, particularly apartments, new rentals, and homes available to purchase under rent-to-own or shared-equity arrangements.

The new rules allowed foreign buyers to purchase apartments ‘off the plan’ but they had to sell them once built. They can now retain ownership, but can’t live in them themselves.

This seems weird, especially when the government says they want to get more Kiwis into home ownership.

And the changes announced yesterday are still being criticised.

Phil Twyford in Opposition in 2016: Foreign buyers’ data selective and ineffective

The Government’s newly released foreign buyer data doesn’t give an accurate picture because it was collected at a time when offshore speculators had temporarily deserted the market, Labour’s Housing spokesperson Phil Twyford says.

“The Government is out of touch with the 70 per cent of New Zealanders that support Labour’s policy to ban offshore speculators from buying existing homes. National should back my Bill when it comes before Parliament next month, instead of supporting foreign speculators against the interests of Kiwi first homebuyers,” Phil Twyford says.

Twyford as Housing Minister in December 2017: Ban on overseas speculators a step closer

“This Government welcomes foreign investment in houses to add to our housing supply,” Phil Twyford says.

“However, purchases of homes by offshore speculators push first home-buyers and families out of the housing market.”

Phil Twyford says the legislative changes demonstrate the Government’s determination to make it easier for New Zealanders to buy their first home.

“We expect the law to be passed early next year fulfilling a key pledge in our 100 Day Plan. The previous National government said it couldn’t be done without breaching trade agreements. They just didn’t try and in doing so, they put foreign buyers ahead of New Zealanders.

“This Government prioritises home ownership and housing affordability for all New Zealanders. This Bill will ensure that house prices are set by New Zealand-based buyers, not international buyers,” Phil Twyford says.

The National opposition now say: Twyford’s numbers badly wrong on foreign buyers

“When challenged on the AM Show today and faced with official statistics, Phil Twyford failed to defend his previous stance that foreigners – particularly Chinese – dominated New Zealand’s property market,” Mrs Collins says.

“He originally claimed that 30 per cent of homes in New Zealand were being sold to foreigners. In the face of irrefutable evidence – he could not defend those numbers.

“Official statistics released yesterday show foreign house buyers make up just three per cent of New Zealand’s residential property market, exactly what the previous National Government maintained.

“In the lead up to the election Labour and Phil Twyford ran a scare campaign claiming buyers with ‘Chinese sounding names’ were not real New Zealanders deserving of a home and were responsible for ‘pricing first-home buyers out of the market’.

RNZ: Overseas house buyer problem ‘was never real’

Many developers are still opposed to a ban on the sale of existing homes to foreigners despite a slackening of the proposed new rules.

Only a fraction of New Zealand’s housing stock is foreign-owned and there are developers who think banning or restricting that investment discriminates.

In the first draft of the Overseas Investment Amendment bill, overseas buyers could buy apartments off the plans, but would have to sell them once the building was completed.

The new draft has softened that, now allowing developers to sell up to 60 percent of their apartments off-plan, without the requirement for buyers to sell within a year.

Official figures show nationally 3 percent of people who bought residential property in the last quarter didn’t hold New Zealand citizenship or resident visas.

Mr Church and other developers believe these figures prove the whole law should be scrapped.

“It indicates that the hyperbole around this issue being a much larger problem is just that, it was never real.”

Interestingly Twyford didn’t feature in yesterday’s announcement, it came from David Parker as Associate Finance Minister.

Foreign buyer screening law reported back

The Bill putting in place the Government’s policy of banning overseas buyers of existing houses has been reported back to Parliament by the Finance and Expenditure Select Committee.

Under the new regime, overseas investors will be able to invest in new housing, particularly apartments, new rentals, and homes available to purchase under rent-to-own or shared-equity arrangements.

“This will help first home buyers to get their foot on the property ladder,” David Parker said.

All permanent residents and resident visa holders who spend the majority of their time in New Zealand will be able to purchase homes under the regime without obtaining consent.

Australian and Singapore citizens and residents will be treated the same as New Zealand citizens and permanent residents.

Australia was always a special case. Singapore was not happy with the initial changes and also pushed for an exemption.

 

 

 

Foreign ‘speculators’ house ban

The Labour led government has announced it is following through on a policy promise to ban non-residents or non-citizens from purchasing existing homes. Australians are excluded from the ban.

This has support from NZ First and the Greens.

NZ Government press release:


Foreign speculators house ban

Foreign speculators will no longer be able to buy houses in New Zealand from early next year, says Prime Minister Jacinda Ardern.

“We are determined to make it easier for Kiwis to buy their first home so we are stopping foreign speculators buying houses and driving up prices. Kiwis should not be outbid like this.

“That is why we are introducing an amendment to the Overseas Investment Act to classify residential housing as “sensitive”. This means non-residents or non-citizens cannot purchase existing residential dwellings. Australians will be exempt as New Zealanders are in Australia.

“We expect legislation to be introduced before Christmas and take effect immediately once passed early in 2018. This will fulfil one of our key 100 Day Plan pledges.

“The previous National government chose to put foreign speculators ahead of Kiwi families, but we have chosen to protect Kiwi families and New Zealand’s best interests.

“That government claimed this could not done without breaching other free trade agreements and that a stamp duty would be the only effective tool.

“The advice we have had from officials is that we can give effect to the ban by a simple amendment to the Overseas Investment Act without breaching any agreement except the Singapore Closer Economic Partnership. The options with Singapore will be worked through.

“The proposed change means we can move our focus away from land issues at the negotiating table at APEC when negotiations on the TPP reach their final stages, and focus on Investor State Dispute Settlement clauses.

“We are concerned by ISDS clauses in the proposed agreement. These confer greater rights on multi-national companies investing in New Zealand than a New Zealand company has.

“We remain determined to do our utmost to amend the ISDS provisions of TPP. In addition, Cabinet has today instructed trade negotiation officials to oppose ISDS in any future free trade agreements.

“The change we have announced today are supported by all parties to the government.

“New Zealanders should be assured that the government I lead will have their best interests at heart when negotiating any free trade agreements.”


This was covered in the prime Minister’s post-Cabinet Press conference:

Ardern on the TPP

One of the first big tests for the incoming Jacinda Ardern led government will be the Trans-Pacific Partnership agreement, which is in the final stages of renegotiation after Donald Trump withdrew the United States, and will need to be addressed at the APEC conference next month.

Ardern has indicated Labour may accept the 11 country trade agreement as long as there were tweaks limiting foreign purchases of property.

Stuff:  Jacinda Ardern: Changes to trade deals possible – walking away from TPP ‘not necessary’

Prime Minister-elect Jacinda Ardern faces a tough sell to impose last minute changes on a free trade agreement between the 11 Pacific Rim countries, as they set to close the deal next month.

Ardern has confirmed she will be heading to Vietnam in November for the Asia Pacific Economic Cooperation (APEC) leaders forum.

It’s her first big test on the international stage where Jacinda Ardern will be rubbing shoulders with the likes of US President Donald Trump, and Japan’s Prime Minister Shinzo Abe. Recent reports have also suggested Russian President Vladimir Putin will be attending.

No less, her yet-to-be-appointed Trade Minister is expected to chair a sideline meeting in the dying throes of negotiations to reach a deal on the TPP11, and Ardern expects to change tack on negotiations and push for a ban on foreign property speculators.

David Parker was Labour’s spokesperson for Trade & Export Growth, and is one of the few incoming ministers with previous experience in Cabinet.

Labour will need someone with experience to dive straight into this important issue.

Leaders involved were hoping to sign the new agreement on the sidelines of APEC,  which meant a tight timeline for trade officials to gain concessions while working to hold ground in other areas.

Ardern She told TVNZ’s current affairs show Q+A she was confident a Labour government policy to ban foreign ownership would not force her to walk from the deal.

From the Q+A interview transcript:

CORIN So you want those things. Do you want, I guess, the tag that can come with it — that sort of Brexit, nationalist sort of tag that can come with that? The idea that we’re suddenly not outward-looking so much.

JACINDA I think probably that sentiment builds up not just around economic markers. In fact, we are a party that believes, for instance, on the important role of trade. We are a free and fair trade party. We are not closed-minded in the role that we have to play in the world.

CORIN But you’re putting in a foreign buyers ban.

JACINDA Yeah, but that’s because we have an absolute failure in our housing market and we’re willing to make sure that we act to preserve the right of anyone who chooses to make New Zealand home to buy a home here. But if I can just finish. That sense of whether or not we’re a closed-off country who isn’t open to the world, I would absolutely refute. New Zealand has always marked out is path as an independent foreign-policy voice but also a world leader. I want us to be seen to be open to ideas but a world leader in areas like the environment and climate change – not closed-minded but outward-facing but looking after our interests.

CORIN You might refute it, but the message that’s sent to investors and to the globe might be that New Zealand is looking more inward and more worried about banning foreigners from buying homes.

JACINDA Well, given that, actually, most of our trading nations who’ve recently signed free trade agreements have done exactly the same thing. I doubt they–

CORIN But we don’t have the same luxury as them.

JACINDA I doubt they look upon us as doing anything they wouldn’t consider doing for themselves.

CORIN We’re $200 billion in debt to the world.

JACINDA We don’t have the luxury of making sure that housing is affordable? We do. We are a prosperous nation. If you can’t get the most basic thing right as ensuring your people are housed in affordable, dry homes, then I don’t know what kind of country we can promise to be to anyone.

CORIN So is that a higher priority than securing a trade deal involving Japan, the world’s third-largest economy? 

JACINDA I refuse to accept they’re mutually exclusive.

CORIN Would you walk away from the TPP, involving Japan, over that issue?

JACINDA Again, that’s not necessary. Our view is that it will be possible to balance our desire to make sure that we provide housing within our domestic housing market that’s affordable by easing demand and banning foreign speculators from buying existing homes, whilst meeting our trade goals as well.

CORIN Have you considered other mechanisms that would do the same thing?

JACINDA Look, we’ll be looking to ways that we can balance that desire to ban foreign speculators. Whichever mechanism we use to deliver it, that is our goal.

CORIN Is your coalition partner comfortable with progressing the TPP?

JACINDA Look, we all see the need to grow exports for us to see extra value gained for our exporters. That is a consensus amongst us. There are concerns with things like ISDS clauses. That’s something that we will continue to work through.

CORIN Well, first of all, are you going to go to APEC?

JACINDA Yes.

CORIN Do you think you can go there and convince the other parties to renegotiate this deal? I mean, you’re under a lot of time pressure, because they’ve actually been working on this right up to the last minute. They want a deal signed, don’t they? And you’ve got to go there and try and convince them to hold off.

JACINDA My job is to go there and convince them to sign to an agreement that will be in our best interests as well. I’m not going to set out on this task, already having decided it’s too hard.

CORIN You don’t feel the pressure of some big players on the world stage that will be wanting you to sign that?

JACINDA Look, I’ve operated in an international environment, albeit a slightly different one, before. I’m used to different forms of negotiation in that kind of environment. Absolutely everyone brings their own interests to the table; that’s what a negotiation is. That’s what we’ve just had for the last 10 days. But my job will be to advocate on behalf of New Zealanders – both homeowners, potential homebuyers and exporters.

Cash rate stays, foreign buyers go

Yesterday the Governor or the Reserve Bank, Graeme Wheeler, announced there would be no change to the record low cash rate of 2.25% and also warned that property investors could soon be targeted with new Loan to Value ration rules.

Wheeler said that rising house prices as a risk to the country’s financial stability.

Later in the day, possibly in part at least in response, the Westpac and ANZ banks said they would no longer lend to overseas buyers of New Zealand properties due to financial risks.

This follows similar moves recently in Australia. Other banks are expected to do likewise.

This is expected and hoped to have some impact on escalating property prices.

NZ Herald: Westpac, ANZ Bank shut out foreign buyers

Westpac New Zealand has announced that from today it will no longer lend to non-resident borrowers with overseas income.

Borrowers on temporary resident visas will only be accepted if they have both a New Zealand address and a New Zealand-based income.

ANZ has also announced restrictions that will effectively shut out most non-resident, overseas-based borrowers, including restricting lending to owner-occupied properties.

The restrictions will not affect New Zealand passport holders living abroad and purchasing property funded by overseas income.

A Westpac spokeswoman said the restrictions “reduces risk”.

“Verification of foreign applications is essential to meeting our lending criteria and obligations, but is operationally difficult in these cases.”

An ANZ spokesman said the changes were made to ensure the bank was “appropriately positioned in the current housing environment, taking into account supply pressure in certain areas”.

Auckland mortgage broker Bruce Patten, of mortgage brokerage Loan Market, said he expected more banks to follow Westpac and ANZ.

The majority of non-resident, overseas-based buyers would take out New Zealand bank loans for purchases here, unless they paid cash, Mr Patten said.

“Most banks around the world won’t take security in a country other than their own…it is going to cut any overseas purchases out.”

Mr Patten believed the change was partly driven by the Australian-owned banks wanting to follow developments across the Tasman – but there could also have been pressure from Government or the Reserve Bank.

“If this has an impact on slowing the house price rise down, then perhaps they might decide that they don’t need to bring [other] measures in.”

Time will tell how much effect this will have on the property market and house prices.

Labour’s official response on foreign buyers

There’s been a lot said via media interviews by Phil Twyford and Andrew Little about Chinese profiling used to highlight the (unknown) level of foreign purchasers in the Auckland property market.

This strategy was launched on Saturday 11 July via an interview of Twyford on The Nation.

Full transcript: Lisa Owen interviews Labour’s housing spokesman Phil Twyford

Video: Interview: Labour’s housing spokesman Phil Twyford

Twyford was subsequently interviewed by media generally, and Little joined the public discussion. Both featured in a number of media reports.

But what has Labour’s formal response been? They have issued two media releases, one each from Little and Twyford.

Time for foreign buyers register

It is time the Government set up a foreign buyers register so New Zealanders can see exactly how many of our houses offshore speculators are purchasing, Opposition Leader Andrew Little says.

“Economic Development Minister Steven Joyce was being cute this morning when he said the Government would be collecting this data from October 1.

“From that date all house buyers will have to have a New Zealand IRD number. That is not the same as a foreign buyers register because there is no guarantee the information will be available in a way that allows public scrutiny.

“A register would provide a searchable and up-to-date database which would inform the market and public debate. Without one, the Government will simply pick and choose data to support its false claim foreign speculators only account for 1 per cent of all house sales.

“The Government must also assure New Zealanders non-resident foreign buyers purchasing properties through companies or trusts will be required to disclose overseas interest in accordance with the Overseas Investment Act which has a 25 per cent threshold.

“Kiwi families who are struggling to buy their own home want to know the impact offshore speculators are having on skyrocketing Auckland house prices. They are sick and tired of losing homes at auction to higher bidders down the end of a telephone line in another country.

“Chinese investment specialist David Mahon today said investors in China are amazed they can come to New Zealand on holiday and buy a house because they are unable to do that anywhere else.

“National needs to start listening to what the public want and set up a proper register, not another halfway measure which is becoming the trademark of this Government,” Andrew Little says.

A careful reference to “investors in China” but nevertheless still targeting one nationality.

And:

Joyce making it up on Aussie non-resident ban

Steven Joyce is at such pains to deflect attention away from his Government’s failure to address the housing crisis, he is now making up stories about Australia’s ban on non-resident house buyers, Labour’s Housing spokesperson Phil Twyford says.

“The Economic Development Minister claims the Australian Federal Government’s ban is not working and it’s now trying to change it.

“However, according to Australian China Relations Institute spokesperson James Lawrenson the ‘Federal Government is happy with the rules’ and ‘if anything they’re getting tougher on enforcement’.

“In fact, an Australian Federal Parliament cross party committee has recommended giving its tax department more powers to clamp down on those using trusts and companies to pose as Australian citizens.

“Like the Australian Government, Labour believes offshore investors should have to build new homes and add to the supply of houses, instead of pricing Kiwi families out of the market.

“In recent days I have been inundated with emails of support for Labour’s policy which has also been backed by BNZ economist Tony Alexander.

“New figures out from Trade Me today show the average asking price for an Auckland home has soared by $130,950 in the past year, a whopping ten times the average increase across the rest of New Zealand.

“Aucklanders are tired of losing their homes at auctions to offshore investors down the end of a telephone line in another country. It is time the Government woke up to this,” Phil Twyford says.

While Twyford initially generalises with “non-resident house buyers” there is a only one country named via “Australian China Relations Institute spokesperson”.

Twyford’s statements versus Labour policy

The Nation has advised (

@PeteDGeorge only confirmed existing policy. And the release involved leader’s office.

Interesting that “the release” involved Little’s office, but Twyford spoke on The Nation about banning foreign ownership.

Labour’s currently published policy is quite vague. From their Policy link Ending the housing crisis:

Our plan

We’ll crack down on speculators through a capital gains tax and restrictions on buyers who don’t live here…

We will

Crack down on speculators through a capital gains tax (excluding the family home), and restrict offshore speculators buying New Zealand houses.

They seem to have backtracked on the capital gains tax.

Twyford on The Nation:

We would ban foreign buyers from buying New Zealand houses, end of story.

We’re going to ban foreign buyers.

“Ban foreign buyers…end of story” sounds far more restrictive than “Restrict offshore speculators buying New Zealand houses”.

Either Twyford has stated they will have much tighter restrictions than previously, or their policy has been misleadingly vague.

Is the foreign ownership ban Labour policy?

On The Nation this morning Labour’s housing spokesperson Phil Twyford stated:

Okay, if it is such a big issue, what would Labour do about it?
We would ban foreign buyers from buying New Zealand houses, end of story.

And:

We’re going to crack down on speculators generally, and we have a policy review underway. There are a myriad of different tax and policy approaches that we can do to level the playing field away from the current incentives for property speculation in our economy. So we’re going to do that. We’re going ban foreign buyers.

So a policy review is under way, but Twyford seems to be stating Labour policy. What does Labour say about this?

Nothing yet, officially at least going by their website:

LabourNews11-07-15

Nothing yet on their Facebook:

LabourFacebook11-07-15

Twitter has nothing official but whoever is on duty re-tweeted two of Twyford’s tweets…

LabourTwitter11-07-15

…but that’s only related to the sales data (which does nothing to identify Chinese descent), no mention of ‘no foreign buyers’ policy.

Leader Andrew little seems to have had no social media activity since 8 July (on Facebook and on his Twitter account).

So far there is no sign of this being  official Labour policy. There’s no sign of Little.

Has Twyford gone to far by saying “We would ban foreign buyers from buying New Zealand houses, end of story ”  and “So we’re going to do that. We’re going ban foreign buyers”?

Little will have some explaining to do. And if he doesn’t back Twyford’s statements the Twyford might have some explaining to do as well.

UPDATE: A tweet from @TheNationNZ

@PeteDGeorge only confirmed existing policy. And the release involved leader’s office

So Little’s office were seemingly involved in this but have kept their distance.